Combining workplace pensions

[Itsmemaggie]

Hi there

I currently have a workplace pension along with two pensions from previous jobs and have been pondering whether I should transfer the old pensions into the new one. Neither of the old pensions are particularly large pots (probably both less than £10k).

I will seek advice from an IFA but would be keen to get about what I need to be considering, questions I should ask, pros and cons, to make sure it’s a productive discussion.

I’m 45 and am well aware that that my pot is way under what it should be, so keen to make the most of what I do have IYSWIM.

My only expertise on this subject is that I have many pension pots from all the different employers I have worked for over the years .

There is no necessity or particular financial advantage to combining pension pots per se. Some people do it for administrative ease. I am afraid I will lose one of those pots since it is a long way until retirement so have combined 3 but still left with 3 other pots!

Since your other 2 pots are smallish, I can see why it you might want to combine it with the current.

Questions your IFA will ask are whether your pension is defined contribution (looks like it) or defined benefit/final salary (unlikely), whether you will lose any bonus or guaranteed returns if you transfer, are there any exit charges your fund will charge to transfer, what charges you are paying to your current provider and what your current pots are charging.

All you need to do is get the last statement for each of your pensions and contact details and the IFA will write to each of the pension providers to get the answers to those questions and then go through with you the options.

After you have combined (or not, as the case may be) the pension pots, the IFA can advise you on whether the funds the pension(s) are invested in are suitable for your risk appetite and whether you want to invest it other funds. The higher the risk generally, the higher the potential return but the reverse is also true, you can experience more dips in value. Since pensions have a long run way until your retire, you can generally take more risk and ride out the dips. You can continue to invest in your employer's default fund (which is usually more conservative) or go self select with your IFA's help and diversify.

I have an NHS pension….absolutely no paperwork and other small pensions..am hoping my NI will join the dots !!

Assuming they're all defined contribution pension, look at the Annual Management Charges for the different pots and see if there's anything to save by combining. Otherwise, apart from administrative ease of having everything together, I prefer to keep mine separate so I will be able to cash them in individually and keep some others invested.

Before you talk to an IFA, check the value of each pot and the annual charges for each, and whether they are DC or DB. When i left one of my jobs, the annual charge changed from something like 0.4 to 0.8% because I was no longer an employee.

I combined mine because some were so small and pathetic it just made sense.

Whether your current pension pot is better than previous employers pension pots will be in the detail of the plan. You could take some advice. Or you could look into it yourself.